Skip to main content

Big PF Contributions? Get Ready to Share with Taxman!

🔹 Q1: PF Maturity = Tax-Free Jackpot?

✅ Yes, if it’s from a recognized PF & you worked ≥ 5 years.
🎯 Example: Mr. Arjun retires after 18 years in a company → ₹20 lakh PF = Fully Tax-Free under Section 10(11).

🔹 Q2: Big PF Contributions? Get Ready to Share with Taxman!
💼 From AY 2022–23, interest on your own PF contribution > ₹2.5 lakh/year is taxable.
💡 Tip: Plan VPF wisely.
📌 Example: Ms. Riya contributes ₹3 lakh in a year → Interest on ₹50,000 is taxable.

🔹 Q3: Self-Contributed PF? Higher Tax-Free Limit!
🎁 No employer = better exemption!
🧾 If employer doesn’t contribute, limit is ₹5 lakh for interest exemption.
Example: CA Neha (no employer PF) contributes ₹4.75 lakh → Interest fully tax-free!

🔹 Q4: Retired? PF Still Earning? So Is Tax Dept!
🛑 Interest after retirement = taxable income
🧾 Example: Mr. Suresh retires in Mar 2024, but keeps PF till Mar 2026 → Interest of ₹1.2 lakh is taxable each year.

🔹 Q5: Approved PF vs. Unapproved PF — Know the Deal!

Type

80C Benefit

Employer Contribution

Tax at Withdrawal

✅ Approved PF

Allowed

Exempt (≤12%)

Mostly Tax-Free

❌ Non-Approved PF

❌ Not Allowed

Not Taxable

Principal + Interest = Taxable

Example: Startup fund not recognized? Watch out — no 80C, tax at withdrawal!

🔹 Q6: Can Employer's Contribution Become a Tax Trap?
Yes! If EPF + NPS + Superannuation > ₹7.5 lakh/year → Excess is taxable perquisite
🧾 Example: Mr. Verma gets ₹9 lakh total from employer → ₹1.5 lakh is taxable salary component.

🔹 Q7: Section 80C – EPF Still Rocks!
🌟 EPF contributions by employees are eligible under 80C (₹1.5 lakh cap)
❌ Non-approved PF = No 80C benefit
Example: ₹60,000 to EPF → Save tax under Section 80C.

🔹 Q8: The Dilip Ranjekar Verdict – What Retirees Must Know
⚖️ ITAT Ruling: Interest on PF after retirement = Taxable
💥 This breaks the myth that PF is tax-free forever.
Example: Mr. Dilip keeps PF 3 years post-retirement – ₹2 lakh interest taxed under “Income from Other Sources.”

 

Labels:

Popular posts from this blog

Save Tax Legally With HUF

  What is a Hindu Undivided Family (HUF)? A Hindu Undivided Family (HUF) is a separate legal entity recognized under Indian tax law, allowing families following Hindu, Jain, Sikh, and Buddhist laws to collectively own property and manage income. It serves as a tool for family wealth management and potential tax optimization. What is the difference between a member and a coparcener in an HUF? A member of an HUF is any individual part of the family through lineal descent, marriage (for wives of male coparceners), or adoption. Members have the right to maintenance from the HUF property but generally cannot demand partition. A coparcener, on the other hand, is a member with a birthright in the joint family property. Under the Hindu Succession (Amendment) Act, 2005, both sons and daughters are coparceners by birth, with rights including demanding partition, joint ownership, limited alienation rights, and the right to question the Karta's actions. How is an HUF formed? Forming ...
Read more

Why Most Businesses Fail

Why Most Businesses Fail: A Practical Q&A on Financial Management 90% of business failures aren’t about poor products or bad luck. They’re about financial missteps. Here's how to avoid them. Q1: Why do most businesses fail? A: The #1 cause is poor financial management. Not sales. Not product quality. Not HR. Over 90% of business closures happen because founders and teams misunderstand or ignore finance fundamentals. Example: A company may keep selling aggressively without realizing it’s burning cash faster than it's earning. No amount of sales saves you from poor cash flow planning. Key Insight: Finance isn’t just for accountants. It’s embedded in every business decision, big or small. Q2: Accounting vs. Financial Management — What’s the difference? A: Accounting records what happened. Financial management decides what should happen next. Accounting = History. Financial Management = Strategy. Example: Your accountant shows...
Read more

Making Gold Work for You: Beyond the Locker

💰 Making Gold Work for You: Beyond the Locker ❓ Bank Lockers vs. Gold Monetisation Scheme (GMS) Q1: Is storing gold in a bank locker really safe? 👉 Not entirely. While lockers are secure from theft, they’re not immune to natural disasters . Example: Lovish Anand, a financial advisor, shared a real story—his friend’s heirloom jewelry rusted during a flood when water seeped into her basement locker . The insurance? Only ₹3 lakh— far less than the actual value. 🔍 Key Insight: Most bank locker insurance barely covers the real worth of your gold. Q2: What exactly is the Gold Monetisation Scheme (GMS), and how does it help? ✅ GMS lets you deposit unused gold (jewelry, bars, coins) with authorized banks. In return, you earn interest (2.25–2.5%) and keep it safe from physical damage. 📦 Your gold is: Tested for purity Weighed and recorded Secured without deterioration or theft risk 🧠 Think of it like this: Instead of gold s...
Read more